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SBP 246: The Sharp Cut: Who Actually Buys on Sale? · Sleeping Barber - A Marketing Podcast

• 0:00
  SPEAKER_01: Welcome to the Sleeping Baba podcast.
• 0:03
  SPEAKER_02: We talk about how often marketing runs on comfort blankets.
• 0:07
  SPEAKER_02: The things we all repeat because they're warm and everybody else is saying them and they feel good.
• 0:13
  SPEAKER_02: And what we do here, in case you're new and you haven't heard these before, is we tend to cut them up and then look what's actually inside.
• 0:22
  SPEAKER_00: Love that sound effect.
• 0:24
  SPEAKER_00: Exactly.
• 0:25
  SPEAKER_00: We're talking about real-world evidence.
• 0:28
  SPEAKER_00: One idea and nothing in them you couldn't afford to your CFO, CMO, heck, the entire C-suite, but just BCC them so then it doesn't feel like you're attacking.
• 0:38
  SPEAKER_00: Yeah.
• 0:39
  SPEAKER_02: So this week that we're recording, we have Black Friday about five weeks out.
• 0:43
  SPEAKER_02: The promo calendars are locked, and this somebody's already writing the 40% off email.
• 0:49
  SPEAKER_00: Last year, which the UK consumer group that tests products and tracks prices, followed 175 Black Friday deals at eight big retailers for a full year.
• 1:00
  SPEAKER_00: On Black Friday itself, not one of them was at its lowest price of the year.
• 1:05
  SPEAKER_02: Right.
• 1:05
  SPEAKER_02: And that's a shopper side.
• 1:07
  SPEAKER_02: So our side is a little bit stranger.
• 1:09
  SPEAKER_02: When researchers look at who actually buys on promotion, it's mostly people who already buy the brand.
• 1:16
  SPEAKER_02: They just paid less in that week.
• 1:18
  SPEAKER_00: And nobody's stopping.
• 1:20
  SPEAKER_00: There's that classic line: you do something so you can see something.
• 1:24
  SPEAKER_00: You want to see the numbers move, so you put something on sale, and that week you run it.
• 1:30
  SPEAKER_00: That moves.
• 1:32
  SPEAKER_02: Yeah, and so today's comfort blanket is a big one.
• 1:35
  SPEAKER_02: A discount wins you new business.
• 1:38
  SPEAKER_02: And the point that we're going to make is pretty simple that a discount rents you this week's sales mostly from your own customers.
• 1:45
  SPEAKER_02: And when the price goes back up, the rental's over.
• 1:47
  SPEAKER_02: So every promotion has to pay for itself while it's running.
• 1:51
  SPEAKER_00: Well, look at who's actually buying on that deal, how long the bump lasts, who really does the math on the discount, and what happens when a company tries to stop.
• 2:01
  SPEAKER_02: Black Friday, as we've talked about before, is a thing that we've done and worked on together.
• 2:06
  SPEAKER_02: And it used to be, as you remember, probably, it was one day.
• 2:10
  SPEAKER_02: And then it was Black Friday week, and then it was Cyber Week, and then it was Black Friday month almost.
• 2:16
  SPEAKER_02: And it's just kind of extended.
• 2:18
  SPEAKER_00: Yes.
• 2:19
  SPEAKER_00: Yeah.
• 2:20
  SPEAKER_00: Early deals.
• 2:21
  SPEAKER_00: Anyways, yes, it couldn't have been more.
• 2:23
  SPEAKER_00: Which measured last year's as four-week sales period from the middle of November to the middle of December.
• 2:31
  SPEAKER_00: And AO, one of UK retailers in that study, said it themselves customers know Black Friday is now at least a month-long promotion.
• 2:40
  SPEAKER_02: It's a chicken rag thing, ultimately.
• 2:42
  SPEAKER_02: Like, did people teach the retailers or do retailers teach the people this behavior?
• 2:46
  SPEAKER_02: And I think it's a little bit of both, but ultimately, if everybody waits for the day to buy, like the Black Friday day to buy, then the weeks before it go quiet.
• 2:56
  SPEAKER_02: So this from the retailer side, they keep pushing the sale earlier and earlier to try and get people to move instead of wait.
• 3:03
  SPEAKER_00: Yeah, agreed.
• 3:04
  SPEAKER_00: And I would also add something here that you also have platforms like Google that keep telling you that, hey, interesting, Black Friday keeps coming earlier and earlier.
• 3:13
  SPEAKER_00: So then there's like data to support this idea that there is earlier excitement where people are discovering.
• 3:19
  SPEAKER_00: So you don't want to make sure you're missing out on that opportunity as well.
• 3:22
  SPEAKER_00: So I don't know, it's a chicken, an egg, and a chicken.
• 3:26
  SPEAKER_00: Chicken, egg, and a chicken.
• 3:28
  SPEAKER_00: And maybe a nest.
• 3:29
  SPEAKER_00: I don't know.
• 3:29
  SPEAKER_00: Maybe a nest.
• 3:30
  SPEAKER_00: Maybe a nest.
• 3:31
  SPEAKER_00: Aside from all that, the on the retail side, part of it is also inventory.
• 3:36
  SPEAKER_00: Think seasonal stuff and hard goods.
• 3:38
  SPEAKER_00: You can't put everything on sale at the same price at the same time.
• 3:42
  SPEAKER_00: So you're naturally rotating products in and out, or you're buying for things like door crashers up front to bring people in.
• 3:50
  SPEAKER_02: Yeah, and so we've been here before.
• 3:51
  SPEAKER_02: We had Herman Simon on the show back in episode 18, actually.
• 3:55
  SPEAKER_02: He's the founder of Simon Kutcher, and it's one of the world's, if not the world's biggest pricing consulting firms.
• 4:02
  SPEAKER_02: Yeah.
• 4:02
  SPEAKER_02: And I said I'd had maybe a handful of conversations about price in my whole career at that time.
• 4:09
  SPEAKER_02: And most of them were really about discounts.
• 4:12
  SPEAKER_00: No kidding.
• 4:13
  SPEAKER_00: And I said in retail, you put a price action on a category to drive volume because you're trying to hit revenue targets, not profit.
• 4:22
  SPEAKER_02: Yeah.
• 4:22
  SPEAKER_02: And then Herman had this great story about a sales executive at BMW who told him that he gets in trouble when the company loses 1% market share, not when profit drops 20%.
• 4:35
  SPEAKER_02: And then Herman had talked about this in his workshops.
• 4:38
  SPEAKER_02: About eight in 10 managers said that they'd rather cut price 5% than lose 5% of their volume.
• 4:44
  SPEAKER_00: Now, one marketing textbooks points out that in big companies, pricing usually isn't set at the top, except by middle managers.
• 4:51
  SPEAKER_00: And guess what?
• 4:52
  SPEAKER_00: Middle managers have volume targets.
• 4:54
  SPEAKER_00: The revenue spike is what everyone above them sees.
• 4:57
  SPEAKER_00: Right.
• 4:58
  SPEAKER_02: And so let's start with who's actually buying when it's on sale.
• 5:01
  SPEAKER_02: The Ehrenberg Bass and Sue the Research Group in Australia, we've we've talked about them a lot.
• 5:06
  SPEAKER_02: If you haven't heard about them, they're really interesting companies.
• 5:09
  SPEAKER_02: They're really good.
• 5:10
  SPEAKER_02: Yeah, they're really smart people.
• 5:12
  SPEAKER_02: Really uh they they've had a lot of studies published about how people actually buy.
• 5:18
  SPEAKER_02: Looking back to 1994 and maybe even earlier, over 100 in this one particular study, over 100 price promotions on grocery products.
• 5:27
  SPEAKER_02: And when the deal ended, sales went right back to where they were.
• 5:29
  SPEAKER_02: And almost everyone who bought on the deal had bought that brand before.
• 5:34
  SPEAKER_00: And that's not what we're taught, though, right?
• 5:37
  SPEAKER_00: Caller's textbook, the one that most of us had in school, says promotions help move customers over the hump and get them essentially to switch.
• 5:46
  SPEAKER_00: It does warn that people learn to wait for the sale.
• 5:49
  SPEAKER_00: It never asks who's actually buying on the deal, new customers or the ones you simply already had.
• 5:55
  SPEAKER_02: The Amber Bassin suit checked again in 2018 across 18 categories in the US and UK.
• 6:00
  SPEAKER_02: And of the people who bought on promotion, 77% had already bought that brand in their last five shopping trips.
• 6:09
  SPEAKER_02: So they're not new, they're basically the same people.
• 6:12
  SPEAKER_02: And buying on the deal didn't make them any more likely to buy again afterwards.
• 6:16
  SPEAKER_00: Sounds interesting, Mark, but then explain PNG.
• 6:19
  SPEAKER_00: Because in the early 90s, they cut coupons by more than half and cut back on deals entirely, and they lost about 18% of their market share, mostly because fewer households bought them at all.
• 6:30
  SPEAKER_00: So the promotions were reaching somebody.
• 6:33
  SPEAKER_00: They were mostly occasional buyers who bought before and come back when there's a deal.
• 6:39
  SPEAKER_00: And the same researchers estimate that PNG US profit may have gone up around a billion dollars because they stopped paying for all those discounts.
• 6:47
  SPEAKER_00: That's an estimate, not a result.
• 6:49
  SPEAKER_00: But they gave up share and may have made more money at the same time, though.
• 6:53
  SPEAKER_02: And I have to admit, I'm actually feeling the pull of that right now, V.
• 6:56
  SPEAKER_02: Like at the Calgary Marketing Association, we're looking at which events to run next year.
• 7:02
  SPEAKER_02: And some of them don't make much money, but it's hard to cut them.
• 7:06
  SPEAKER_02: Cutting them probably makes sense, but when the revenue number goes down, that feels worse, even if we end up making more profit.
• 7:14
  SPEAKER_00: So promotions reach people.
• 7:17
  SPEAKER_00: The question is, how long does it last?
• 7:20
  SPEAKER_00: And I'll defend the spike, though, because sales jump that week and you can see it.
• 7:24
  SPEAKER_00: So you think of the big promotional periods.
• 7:26
  SPEAKER_00: You can see that happen.
• 7:27
  SPEAKER_00: You feel it.
• 7:28
  SPEAKER_02: Yeah, and I think this is the thing where it has to jump a lot more than people think.
• 7:33
  SPEAKER_02: And it it's harder to track some of the stuff, I would say.
• 7:37
  SPEAKER_02: Yeah.
• 7:38
  SPEAKER_02: Easier to follow revenue.
• 7:39
  SPEAKER_02: If half of every sale is your margin, 20% off means you need about two-thirds more sales just to make the same money.
• 7:48
  SPEAKER_02: At 30% off, you need two and a half times the sales.
• 7:51
  SPEAKER_02: So volume is such a huge part of that.
• 7:55
  SPEAKER_00: Yeah, and Herman Simon had another story about that very example as well.
• 7:59
  SPEAKER_00: A big German retailer ran a we'll pay your sales tax sale, 19% off.
• 8:04
  SPEAKER_00: They got 40% more people through the door.
• 8:06
  SPEAKER_00: And then, of course, you're looking at those numbers, you're thrilled.
• 8:09
  SPEAKER_00: Foot traffic went up, it all went up, it's just fantastic.
• 8:12
  SPEAKER_00: He did their math on their margin and said that they needed about three times more traffic just to break even.
• 8:19
  SPEAKER_02: Yeah, so they celebrated a promotion that lost money, and that's the good week.
• 8:24
  SPEAKER_02: Yeah.
• 8:25
  SPEAKER_02: And then you've got the weeks afterwards to still deal with.
• 8:28
  SPEAKER_00: No, exactly.
• 8:29
  SPEAKER_00: So one study tracked soup and yogurt promotions in grocery stores for two years.
• 8:34
  SPEAKER_00: The bump was gone in about two weeks.
• 8:37
  SPEAKER_00: And the longest it ever lasted was eight.
• 8:40
  SPEAKER_00: And only one out of 29 cases did the promotion change sales for good.
• 8:45
  SPEAKER_00: And for about half the brands, the share of shoppers picking the brand dropped below normal once the deal ended.
• 8:53
  SPEAKER_02: Yeah, and then over years people learn.
• 8:55
  SPEAKER_02: Another study followed 691 households for more than eight years.
• 8:59
  SPEAKER_02: And they didn't switch brands.
• 9:01
  SPEAKER_02: They waited for their own brand to go on sale, then stocked up.
• 9:05
  SPEAKER_02: The researcher's example was Coke.
• 9:07
  SPEAKER_02: So if you if you run enough deals and 99 cents starts to feel like a real price of a$1.49 Coke.
• 9:13
  SPEAKER_00: Right.
• 9:14
  SPEAKER_00: Now the textbook example of Bed Bath and Beyond, regular shoppers said they wouldn't walk in without a minimum 20% off coupon.
• 9:23
  SPEAKER_00: One report wrote that shopping there with a coupon had started to feel like a given instead of a treat.
• 9:30
  SPEAKER_00: At that point, the coupon now becomes the price.
• 9:34
  SPEAKER_02: Yeah, and once the coupon is a price, you're paying for that discount on almost every sale, not just the promo ones.
• 9:41
  SPEAKER_00: But I'll push back on one thing.
• 9:43
  SPEAKER_00: The soup and yogurt study also found more people bought soup overall.
• 9:48
  SPEAKER_00: The brand's bump faded, but the category grew.
• 9:51
  SPEAKER_00: So that has to account for a win, at least for the store.
• 9:55
  SPEAKER_00: And the reality is that's how retail actually thinks about it.
• 9:58
  SPEAKER_00: Nobody puts one item on sale and hopes.
• 10:01
  SPEAKER_00: That's what the door crashes are for.
• 10:04
  SPEAKER_00: You put it on the front of the flyer with a big sales up to 60, 70, 80 off to just kind of attract people in.
• 10:10
  SPEAKER_00: You buy those in minimum quantities and you try to make sure that they don't last very long.
• 10:15
  SPEAKER_00: And it makes your margin on everything else look better if you're coming in just for the deal, but then you're increasing your basket size.
• 10:22
  SPEAKER_00: So that's the trade-off there, too.
• 10:24
  SPEAKER_00: It could be used strategically.
• 10:26
  SPEAKER_02: So the classic test of that isn't kind of that thinking though.
• 10:30
  SPEAKER_02: And so two marketing professors tracked two grocery stores for 131 weeks.
• 10:36
  SPEAKER_02: Only one of eight loss leaders brought more people into the store, and none of them made any money.
• 10:44
  SPEAKER_00: Yeah, but that was only two stores back in the 80s.
• 10:47
  SPEAKER_00: So I'd love to take that test again.
• 10:49
  SPEAKER_00: And I I probably approach this more from a grain of salt right now.
• 10:53
  SPEAKER_00: But the reality is the supplier has its own blind spot as well.
• 10:57
  SPEAKER_00: By the time you take off every rebate, every allowance you pay to the retailer, and every dollar you put into promotions, what you actually keep is a lot less than the list price.
• 11:08
  SPEAKER_00: Now, consultants call that the pocket price, and most companies can't tell you what that is for each customer.
• 11:15
  SPEAKER_02: Yeah, and it's fuzzy for shoppers too.
• 11:17
  SPEAKER_02: So we bought new appliances in the spring, and there was a mail-in rebate, and they got delivered in the summer and then installed later in the summer, and then we didn't have the boxes and the paperwork in hand until after really the fall.
• 11:32
  SPEAKER_02: By then the rebate had expired, and so we bought it during this promotion and and we still missed it.
• 11:38
  SPEAKER_02: And I felt less like a discount, more like a sales tactic that just left a bad taste in my mouth.
• 11:44
  SPEAKER_00: Yeah, honestly, and a rebate only costs the brand if people actually claim it.
• 11:49
  SPEAKER_00: So it's smart.
• 11:51
  SPEAKER_02: Yeah, yeah, it's patent.
• 11:53
  SPEAKER_02: Sorry about that.
• 11:54
  SPEAKER_02: Fucking kills me.
• 11:58
  SPEAKER_02: But in B2B, it's also really hard to see.
• 12:00
  SPEAKER_02: So before marketing, I was in sales and I sold broadcast media, and nobody really knows what a spot or campaign is worth.
• 12:07
  SPEAKER_02: And so you negotiate against whatever the competitors are quoting in often cases.
• 12:12
  SPEAKER_02: And I had colleagues selling the same product for the same company who'd always go lower than I would, or sometimes I go lower than them.
• 12:19
  SPEAKER_02: It's not consistent.
• 12:20
  SPEAKER_00: When you shared that with Herman Simon on episode 18, he said that there are value sellers and price sellers.
• 12:26
  SPEAKER_00: When his firm help companies replace the price sellers, margin usually went up by two points.
• 12:32
  SPEAKER_00: He also said about three-quarters of all prices in the world are negotiated, not fixed on a tag.
• 12:40
  SPEAKER_00: That's a crazy number.
• 12:41
  SPEAKER_00: Three quarters.
• 12:43
  SPEAKER_02: That is a big number.
• 12:44
  SPEAKER_02: Of all prices in the world are negotiated.
• 12:47
  SPEAKER_02: That's crazy.
• 12:48
  SPEAKER_02: Yeah.
• 12:49
  SPEAKER_02: And that's happening all the time in the moment.
• 12:53
  SPEAKER_02: That's wild.
• 12:54
  SPEAKER_02: If you look at how most salespeople get paid, which is where I was back in the day, my commission was based on the sale.
• 13:01
  SPEAKER_02: It wasn't on the margin.
• 13:02
  SPEAKER_02: So it was the total deal size that I got paid on.
• 13:06
  SPEAKER_02: And the discount cost you nothing, cost me nothing.
• 13:10
  SPEAKER_02: Um and it really, I mean, really, I mean I still got paid.
• 13:14
  SPEAKER_02: I lowered the total commission, I guess, but it wasn't, I was trying to push for the sale, not for the size of the sale necessarily.
• 13:22
  SPEAKER_02: And I didn't care at all about margin.
• 13:24
  SPEAKER_02: So it gets the deal closed, and then the company ends up eating the difference.
• 13:29
  SPEAKER_00: So the person with the most power to discount usually has the least reason not to.
• 13:34
  SPEAKER_02: Yeah.
• 13:35
  SPEAKER_02: And the timing makes it worse.
• 13:37
  SPEAKER_02: So when I was doing marketing for an SAP reseller, the sales team worked from a buying model based on spin selling, which is actually pretty good.
• 13:45
  SPEAKER_02: Early on, when the buyers are working out the problem, price barely comes up, but it comes back hard at the very end when they're starting to negotiate.
• 13:54
  SPEAKER_00: Yeah, and you're right, Mark.
• 13:55
  SPEAKER_00: And that's also right when the salesperson is up against a quota and a deadline at the same time.
• 14:01
  SPEAKER_00: But the price isn't the only thing on a buyer's mind at that point.
• 14:05
  SPEAKER_00: They're also asking, will this actually work?
• 14:07
  SPEAKER_00: Will these people deliver this product?
• 14:09
  SPEAKER_00: A discount doesn't answer any of those.
• 14:12
  SPEAKER_00: A guarantee or a call from a customer who's already purchased it might close the deal without even having to drop the price.
• 14:20
  SPEAKER_02: Yeah.
• 14:20
  SPEAKER_02: And that whole classic line that nobody got fired for buying IBM.
• 14:24
  SPEAKER_02: There's also a little bit of that going on.
• 14:25
  SPEAKER_02: Am I going to get fired for making this decision?
• 14:28
  SPEAKER_02: Absolutely.
• 14:29
  SPEAKER_02: So there's a risk component that is not included in the price.
• 14:33
  SPEAKER_02: It probably gets amplified by the price, but there's just a risk about the decision that gets amplified at the end of a deal.
• 14:40
  SPEAKER_02: So the store, the supplier, and the salesperson all doing different kinds of math.
• 14:44
  SPEAKER_02: And the brand on sale is usually the one renting its own buyers back.
• 14:49
  SPEAKER_01: Totally.
• 14:49
  SPEAKER_02: Which makes you wonder why everyone doesn't just stop doing that.
• 14:53
  SPEAKER_02: Just stop doing that.
• 14:53
  SPEAKER_02: Walmart.
• 14:54
  SPEAKER_02: Yeah, and Walmart is a is a case for not paying, playing the discount game at all, ironically.
• 15:01
  SPEAKER_02: They have everyday low prices, and so paid for by everyday low costs.
• 15:07
  SPEAKER_02: So full trucks, their own distribution, thinner margins on purpose.
• 15:10
  SPEAKER_02: And Walmart says that consumers want predictable prices, not a roller coaster.
• 15:15
  SPEAKER_00: But Walmart also built the whole company around the idea of low costs.
• 15:20
  SPEAKER_00: Most retailers didn't.
• 15:21
  SPEAKER_00: And you can't just bolt that on very easily.
• 15:26
  SPEAKER_02: Totally.
• 15:26
  SPEAKER_02: Yeah, and that's a whole other strategy.
• 15:29
  SPEAKER_02: Your entire business needs to be built around.
• 15:31
  SPEAKER_02: We did that recent episode on Target, Canada, and that was one of the big things that we talked about there.
• 15:38
  SPEAKER_02: Herman Simon had a name for that difference: good market share and bad market share.
• 15:43
  SPEAKER_02: So Walmart can sell cheap every day because it costs its costs are low every day.
• 15:48
  SPEAKER_02: If you buy share with discounts and you don't have those low costs, then that's actually bad market share and it can't last.
• 15:57
  SPEAKER_00: Yeah, and then it was what JCPenney in 2012, their new CEO at the time, the guy who built the Apple store, killed coupons overnight.
• 16:04
  SPEAKER_00: Sales at existing stores fell almost 19% in the first quarter and 26% by the third.
• 16:12
  SPEAKER_00: He said it himself, coupons were a drug.
• 16:17
  SPEAKER_02: Yeah, and to be fair, JCPenney changed a lot more than the prices that year.
• 16:21
  SPEAKER_02: I remember, do I forget the guys?
• 16:22
  SPEAKER_02: Ron Ron Joy or something like that.
• 16:25
  SPEAKER_02: Um yeah, anyway, there's a company that pulled back from discounting and it worked, and it's Canadian.
• 16:34
  SPEAKER_02: Um, McCain.
• 16:36
  SPEAKER_02: They there's a great study from them.
• 16:38
  SPEAKER_02: This is a UK-based report, but McCain in the frozen french fry category.
• 16:42
  SPEAKER_02: Um in the UK in 2014, store brands like Aldi were eating into them, pun intended.
• 16:50
  SPEAKER_02: So they did what everyone does, they did more promotions, deeper ones, and the price paid per bag drop and revenue still went down.
• 16:59
  SPEAKER_02: So they pulled the promotions back slowly and put that money into ads.
• 17:03
  SPEAKER_02: And nine years later, they're selling more chips at a higher price.
• 17:07
  SPEAKER_00: But look at how they did that.
• 17:09
  SPEAKER_00: Not overnight, like say JCPenney did.
• 17:12
  SPEAKER_00: And they didn't just stop, they cut back over the years and spent that back on brand the whole time.
• 17:18
  SPEAKER_00: And that's coming from their own awards entry.
• 17:21
  SPEAKER_00: So it's the best version of the story that they could possibly tell.
• 17:25
  SPEAKER_02: Chips, when I mentioned chips earlier, in the UK they call French fries chips.
• 17:29
  SPEAKER_02: So that's what we're talking about.
• 17:30
  SPEAKER_02: Right.
• 17:30
  SPEAKER_02: Um, and there Ehrenberg Bass textbook says it best.
• 17:34
  SPEAKER_02: The promotion is a defense.
• 17:35
  SPEAKER_02: You run it so a competitor doesn't take your volume.
• 17:38
  SPEAKER_00: Quitting cold turkey really doesn't work.
• 17:40
  SPEAKER_00: Every promotion has to earn its keep while it runs.
• 17:44
  SPEAKER_00: And it has to be honest, and that has to be the law.
• 17:47
  SPEAKER_00: Here in Canada, the competitor, the competition bureau says a regular price has to be one you actually sold most of your stock at or offered in good faith for a real stretch of time, usually within a year.
• 17:59
  SPEAKER_00: The US and Europe have their own versions of that.
• 18:02
  SPEAKER_02: Yeah, and it matters because most of us couldn't tell what a toothpaste actually costs.
• 18:08
  SPEAKER_02: Um we know roughly where a brand sits against others, and and so the was price, what it was, tells us what's the deal.
• 18:18
  SPEAKER_02: It's like that price anchoring thing.
• 18:19
  SPEAKER_02: So which, that company that we were talking about before, the study that did the study found that toothbrush advertised as half off a recommended price it had carried for 13 days out of six months.
• 18:32
  SPEAKER_00: So if you take one thing away from this episode today, a discount mostly gives the people who already buy from you a cheaper week.
• 18:40
  SPEAKER_00: Now you pay for that in margin, and because they likely stocked up, a lot of them don't need to buy from you in the next few weeks again.
• 18:48
  SPEAKER_00: So you're paying for it twice, essentially.
• 18:51
  SPEAKER_02: Yeah, and we've both been in the meeting where the spike chart goes up on the screen and everybody's happy.
• 18:56
  SPEAKER_02: Uh nobody asks who bought or what it costs.
• 19:00
  SPEAKER_02: And if you're like us, you've not alone.
• 19:02
  SPEAKER_00: Yep.
• 19:03
  SPEAKER_00: So quick recap: the people buying on a deal are mostly your own customers.
• 19:09
  SPEAKER_02: And then the bump's gone in a couple weeks, and then the dip after it is real.
• 19:13
  SPEAKER_00: The store, the supplier, and the salesperson are each doing different math the whole time.
• 19:19
  SPEAKER_02: Yeah, and you can't quit cold, which is the McCain example, which pull back slowly and put the money into the brand.
• 19:27
  SPEAKER_00: So what do you actually change?
• 19:28
  SPEAKER_00: Well, when we had Herman Simon on, the way we put it was good pricing comes down to three things.
• 19:35
  SPEAKER_00: Create value, put a number on it, and tell people about it.
• 19:38
  SPEAKER_00: That's the work you do instead of discounting.
• 19:41
  SPEAKER_00: Give people more reasons to pay the price that you already have.
• 19:46
  SPEAKER_02: Yeah, and if you need something to happen this week, it doesn't have to be a price cut.
• 19:50
  SPEAKER_02: It can be additional things, value-added things like free shipping, a free quote, something useful, a reason to act that doesn't actually come off your margin.
• 20:00
  SPEAKER_00: So the ask before Black Friday month kicks off, put three lines on your promo PL.
• 20:06
  SPEAKER_00: The margin you gave to people, likely bought anyway, the dip in the weeks after that, and what the rest of the basket actually did for you.
• 20:16
  SPEAKER_02: Yeah, that's a good point.
• 20:17
  SPEAKER_02: And if you sell in B2B, look at what your sales team gets paid on.
• 20:21
  SPEAKER_02: If it's revenue, you've given them every reason to discount.
• 20:24
  SPEAKER_00: Everything we talked about in this episode is in the show notes, along with a discount bubble on the evidence line.
• 20:32
  SPEAKER_02: Oh, the evidence line, by the way, is on my website.
• 20:34
  SPEAKER_02: I just put this evidence line though, so that's what the reference is too.
• 20:37
  SPEAKER_02: Yeah.
• 20:38
  SPEAKER_02: Um, you can take a look at, I think there's 180 models that I've added on there, quadical.com, um, where you can look at all the different models that exist and their popularity and how much evidence there is behind them.
• 20:51
  SPEAKER_02: So thanks for keeping us in your ears.
• 20:54
  SPEAKER_02: Stay sharp, everyone.